Q1. What is the maximum time limit for allotting shares after receiving foreign investment in India?<\/strong><\/p>\n\n\n\nUnder FEMA regulations, an Indian company must allot shares within 60 days of receiving the foreign remittance. If shares are not allotted within this period, the funds must be refunded to the foreign investor with applicable bank interest. Failure to comply constitutes a FEMA contravention.<\/p>\n\n\n\n
Q2. Is RBI approval required before remitting funds to India for share capital?<\/strong><\/p>\n\n\n\nFor sectors covered under the Automatic Route, no prior RBI approval is required. The investor can remit funds directly. However, post-allotment, the company must file Form FC-GPR with the RBI within 30 days. Government Route sectors require prior approval from the relevant ministry before remittance.<\/p>\n\n\n\n
Q3. Can an NRI invest in an Indian company as share capital through an NRO account?<\/strong><\/p>\n\n\n\nNRI investments in Indian companies as equity share capital are typically required to be made through NRE (Non-Resident External) accounts to ensure repatriability. NRO account funds can be used for certain investments but may be subject to repatriation restrictions and different tax treatment under Indian income tax rules.<\/p>\n\n\n\n
Q4. What valuation method is mandatory for share issuance to a foreign investor?<\/strong><\/p>\n\n\n\nShares issued to foreign investors must be priced at or above Fair Market Value (FMV). For unlisted companies, FMV is determined using the Discounted Cash Flow (DCF) method or Net Asset Value (NAV) method by a SEBI-registered Merchant Banker or Chartered Accountant. The valuation must be contemporaneous with the date of issuance.<\/p>\n\n\n\n
Q5. What are the consequences of non-filing or late filing of FC-GPR with RBI?<\/strong><\/p>\n\n\n\nLate or non-filing of FC-GPR exposes the Indian company to compounding proceedings under FEMA, financial penalties, and regulatory scrutiny that can affect future fundraising rounds, banking relationships, and corporate standing. The RBI has a late submission fee structure, and delays can complicate audits and due diligence for subsequent investors.<\/p>\n","protected":false},"excerpt":{"rendered":"
If you are planning to remit funds to India for share capital, understanding the legal framework before initiating a single transaction is not optional \u2014 it is essential. Whether you are a foreign company establishing an Indian subsidiary, an NRI investing in a startup, or a global investor participating in a funding round, India’s regulatory […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,812],"tags":[745,801,3393,3248,3392,3256,2568,3398,1400,3395,2987,953,3399,2637,3396,3391,3390,3397,3394],"class_list":["post-9207","post","type-post","status-publish","format-standard","hentry","category-uncategorized","category-blog","tag-company-formation-in-india","tag-company-setup-in-india","tag-fc-gpr-filing-india","tag-fdi-automatic-route-india","tag-fdi-india-2026","tag-fema-compliance-india","tag-fema-non-debt-instruments-rules","tag-foreign-company-india-subsidiary","tag-foreign-investment-india","tag-inbound-remittance-india","tag-india-fdi-regulations-2026","tag-mca-compliance-india","tag-nri-equity-investment-india","tag-nri-investment-india","tag-rbi-firms-portal","tag-rbi-share-capital-remittance","tag-remit-funds-to-india-for-share-capital","tag-share-allotment-foreign-investor","tag-share-subscription-agreement-india"],"_links":{"self":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9207","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/comments?post=9207"}],"version-history":[{"count":2,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9207\/revisions"}],"predecessor-version":[{"id":9210,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/posts\/9207\/revisions\/9210"}],"wp:attachment":[{"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/media?parent=9207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/categories?post=9207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/startupsolicitors.com\/blog\/wp-json\/wp\/v2\/tags?post=9207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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